Copper hit a record high on Wednesday on boosted by a weaker dollar, but turned negative after data showed US housing starts fell more than expected and equities markets dipped. Benchmark copper on the London Metal Exchange (LME) hit a record high at $9,781 a tonne. It was untraded in LME rings and last quoted at $9,570/9,575 a tonne from a close of $9,700 a tonne on Tuesday.
The previous record of $9,754 a tonne was hit on January 4. "It's a miss, but not a disaster," RBS Global Banking & Markets analyst Daniel Major said of the housing starts. But lifting industrial metals' overall positive mood was a report that China's consumer prices rose 4.6 percent in the year to December, a slowdown from a 5.1 percent pace in November, which would reduce the need for aggressive monetary tightening.
The official figures are due on Thursday. Copper premiums for physical material in Europe softened this week as buying slowed ahead of the Lunar New Year, but levels held near four-year highs and looked set to stay firm on supply tightness concerns. Inventories of copper in London Metal Exchange warehouses continued to rise, up 3,825 tonnes at 381,750 tonnes.
Since December 9 stocks have climbed over 32,000 tonnes, raising some concerns about waning demand. But the levels are still relatively low, down about a third from mid-February, when copper stocks hit a 6-1/2 year high. Stocks of lead in LME warehouses also rose, up 17,975 tonnes to 261,925, their highest since May 1995. The market kept an eye on a dominant position controlling around 90 percent of warrants on LME lead stocks. One trader said this was a supportive factor in the market.
In data released last week, dominant positions were seen at 30-40 percent. Indeed, lead premiums for physical material were firming in Europe as traders cited improving demand. Traders quoted the premium for lead at $65-75 a tonne - compared with quotes of $45-65 in November.
But demand recovery is slow. Underlining this, the Lisbon-based International Lead and Zinc Study Group (ILZSG) showed in its monthly bulletin the global lead market was in surplus by 42,000 tonnes in the first 11 months of the year. Lead closed at $2,531 a tonne in rings, versus Tuesday's close at $2,623.5. Nickel was at $25,655 a tonne from $26,100. Zinc was at $2,390 a tonne from $2,436, tin closed at $26,900 from $26,925 and aluminium was at $2,437 from $2,450 a tonne.
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